Date: 19981014

Docket: A-184-96

CORAM:      DESJARDINS J.A.

         LINDEN J.A.

         LÉTOURNEAU J.A.

BETWEEN:

     BARTHOLOMEW DENELZEN

     Appellant

AND:

     HER MAJESTY THE QUEEN

     Respondent

     Heard at Toronto, Ontario, Tuesday, October 6, 1998

     Judgment delivered at Ottawa, Ontario, Wednesday, October 14, 1998

REASONS FOR JUDGMENT BY:      LÉTOURNEAU J.A.

CONCURRED IN BY:      DESJARDINS J.A.

     LINDEN J.A.

Date: 19981014

Docket: A-184-96

CORAM:      DESJARDINS J.A.

         LINDEN J.A.

         LÉTOURNEAU J.A.

BETWEEN:

     BARTHOLOMEW DENELZEN

     Appellant

AND:

     HER MAJESTY THE QUEEN

     Respondent

     REASONS FOR JUDGMENT

LÉTOURNEAU J.A.

[1]      This is an appeal against a decision of Mogan J.T.C.C. which raises two issues: the validity of the notice of reassessment sent to the appellant by the Minister of National Revenue (Minister) pursuant to subsection 152(2) of the Income Tax Act (Act) and the impact of an amendment to the Separation Agreement signed by the appellant and his wife in the context of a petition for divorce filed by Ms. Denelzen.

[2]      The appellant contends that the notice of reassessment was invalid because it was sent to the wrong address and, as a result, he never received it. I hasten to add that the reassessment came to the appellant's attention over a month later when he received a letter from Revenue Canada explaining the adjustments to his income. He then filed and served a Notice of Objection which led to these proceedings. In support of his contention before us, he submitted a number of authorities some of which are of ancient vintage and limited persuasion¹. In any event, these authorities can all be distinguished on the facts of this case.

[3]      The Minister sent the notice of reassessment to the appellant at the address that he had given the previous year in his tax return, i.e., 73 Homewood Drive, Toronto, Ontario. This address was wrong as the appellant did not reside on Homewood Drive, but rather on Homewood Avenue. There is evidence on the record that both Homewood Avenue and Homewood Drive referred to different locations in the Toronto region, one being in central Toronto and the other in North York, a suburb north of Toronto at the time.

[4]      In addition, the address provided by the appellant was deficient in that it did not indicate the postal code. An employee of Revenue Canada added the postal code to the address on the notice, but made a typographical error in transcribing it from other documents in the file. It should have read M4Y 2K1 instead of M4K 2K1.

[5]      In essence, the appellant submits that his two failures, i.e., his failure to provide the right address and his failure to provide an appropriate postal code which could have remedied the error in the address, have been somewhat overtaken by the Minister's error in trying to complete the wrong and defective address given by the appellant.

[6]      There is simply no merit in the appellant's contention. If the notice of reassessment had been sent to the address indicated on his tax return without the addition of the postal code, it would have been mailed to the wrong address. Yet, the appellant would have had no valid ground of complaint because it would have been sent to the address that he gave. I honestly fail to see how the fact of sending the notice to the wrong address that he gave, with a wrong postal code, can give him a valid ground of complaint, especially as the Minister's erroneous intervention was induced and necessitated by the appellant's failure in the first place to provide his postal code as required. To put it another way, the appellant's failure to provide a correct and complete address "cannot be laid at the feet of the Minister" (Canada (Attorney General) v. Bowen, [1992] 1 F.C. 311, at p. 315 (F.C.A.)).

[7]      Moreover, subsections 152(3) and 152(8) of the Act make it clear that the validity of a notice of assessment as well as the liability of a taxpayer is not to be affected by errors or defects appearing therein:

(3) [Liability for tax].-- Liability for the tax under this Part is not affected by an incorrect or incomplete assessment or by the fact that no assessment has been made.

(8) Idem.-- An assessment shall, subject to being varied or vacated on an objection or appeal under this Part and subject to a reassessment, be deemed to be valid and binding notwithstanding any error, defect or omission therein or in any proceeding under this Act relating thereto.

[8]      In my view, these curative provisions apply in the present circumstances and are a complete answer to the appellant's submission (Riendeau v. The Queen, 91 DTC 5416 (F.C.A.); M.N.R. v. Leung, [1994] 1 F.C. 482 (F.C.T.D.)).

[9]      The appellant submits as his second ground of appeal that the Tax Court judge misapprehended the nature of the negotiations between the two solicitors representing the two spouses and, as a result, misapprehended the effect of the amendment, mailed by the appellant's solicitor to the wife's solicitor, on the already signed agreement. The amendment stated that "the husband agrees to cause the company to redeem the share held by the wife to make payment in accordance with the agreement".

[10]      The Tax Court judge found at pages 18 and 20 of his decision that the letter sent by the appellant's solicitor which contained the said amendment was "too inaccurate and too ambiguous to be regarded as an amendment to the relative clarity of the Separation Agreement" and, as events unfolded, both solicitors for the two spouses "were flying in a fog of ambiguity and confusion with the letter... and the manner in which the share was later redeemed".

[11]      In my view, there was ample evidence on the record to support the learned judge's findings and I see no reason to intervene. The amendment, which was couched in ambiguous terms and appeared innocuous on its face, would have had the effect of redeeming the share in the hands of Ms. Denelzen to her detriment, but to the benefit of the appellant who would have avoided acquiring his wife's share in the Company at an adjusted cost base of one dollar. There would have been significant tax implications for Ms.Denelzen as a result. I agree with the Tax Court judge that the amendment would have had to be set in much clearer terms and language than it was to "achieve such a reversal of fortunes" (Decision, page 18).

[12]      I would dismiss the appeal with costs.

     "Gilles Létourneau"

     J.A.

"I concur

     Alice Desjardins J.A."

"I agree

     A.M. Linden J.A."

---

[13]     

__________________

¹      Flanagan v. The Queen et al., 87 DTC 5390 (F.C.A.); A.B.P. Administration (S.A.) Limitée v. The Queen, 95 DTC 684 (T.C.C.); Scott v. M.N.R., 60 DTC 1273 (Exch. Ct.); McIntyre v. M.N.R., 93 DTC 999 (T.C.C.); Aztec Industries Inc. v. The Queen, 95 DTC 5235 (F.C.A.); Multi-Malls Inc. v. M.N.R., 86 DTC 1724 (T.C.C.).